nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒05‒09
five papers chosen by
Tommaso Reggiani
University of Cologne

  1. Wage Premia in Employment Clusters: How Important is Worker Heterogeneity? By Shihe Fu; Stephen Ross
  2. Cooperation and Personality By Proto, Eugenio; Rustichini, Aldo
  3. Acquisition Premiums of Executive Compensation in China: a Matching View By Kang, Lili; Peng, Fei
  4. Too Old To Work, Too Young To Retire? By Andrea Ichino; Guido Schwerdt; Rudolf Winter-Ebmer; Josef Zweimüller
  5. Sabotage in Handicap Contests By Alasdair Brown; Subhasish M. Chowdhury

  1. By: Shihe Fu; Stephen Ross
    Abstract: This paper tests whether the correlation between wages and the spatial concentration of employment can be explained by unobserved worker productivity differences. Residential location is used as a proxy for a worker’s unobserved productivity, and average workplace commute time is used to test whether location-based productivity differences are compensated away by longer commutes. Analyses using confidential data from the 2000 Decennial Census Long Form find that the agglomeration estimates are robust to comparisons within residential location and that the estimates do not persist after controlling for commuting costs suggesting that the productivity differences across locations are not due to productivity differences across individuals.
    Keywords: Agglomeration, Wages, Sorting, Locational Equilibrium, Human Capital Externalities
    JEL: R13 R30 J24 J31
    Date: 2013–10–14
  2. By: Proto, Eugenio (Department of Economics, University of Warwick); Rustichini, Aldo (Department of Economics, University of Minnesota)
    Abstract: Cooperating behavior may be fostered by personality traits reflecting either favorable inclination to others or willingness to comply with norms and rules. We test the relative importance of these two factors in an experiment where subjects provide real mental effort in two treatments with identical task, differing only by whether others' payment is affected. If the first hypothesis is true, subjects reporting high Agreeableness score should put more effort; if the second is true, reporting higher Conscientiousness should predict more effort. We find experimental support for the second hypothesis but not for the first, as subjects reporting high Altruism do not behave consistently with this statement. Key words: Personality Traits ; Cooperation ; Effort Provision JEL classification: C90 ; D03 ; D82
    Date: 2014
  3. By: Kang, Lili; Peng, Fei
    Abstract: More aggressive acquiring firms paid higher executive compensation than non or less aggressive acquiring firms. This paper applies the generalized propensity score (GPS) methodology to estimate the relationship between a firm’s acquisition and its executive compensation. Allowing for continuous treatment, that is, different levels of the firms’ acquisition activities, we apply the GPS method on a panel data set of Chinese Public Listed Companies (PLCs) and find that there is a causal effect of firms’ acquisition activities on executive compensation. However, there is a divergent interests between the board directors and executive managers which may bring serious agency problem in the acquisition decision. The self-selection effect plays a dominant role in the acquisition premiums of top 3 board directors, while the learning-by-acquiring effect on compensation is more prominent for executive managers than board directors. As the executive managers as a whole, can benefit more executive management positions as well as higher growth of executive compensation from aggressive acquisition than board directors and top 3 executive managers.
    Keywords: Acquisition Decision; Executive Compensation; Generalized Propensity Score; Agency problem
    JEL: C14 G34 J33 M12
    Date: 2014–04
  4. By: Andrea Ichino (Università di Bologna (UNIBO)); Guido Schwerdt (Ifo Institute for Economic Research); Rudolf Winter-Ebmer (University of Linz and Institute for Advances Studies, Vienna); Josef Zweimüller (University of Zurich)
    Abstract: We study whether employment prospects of old and young workers differ after a plant closure. Using Austrian administrative data, we show that old and young workers face similar displacement costs in terms of employment in the long-run, but old workers lose considerably more initially and gain later. We interpret these findings using a search model with retirement as an absorbing state, that we calibrate to match the observed patterns. Our finding is that the dynamics of relative employment losses of old versus young workers after a displacement are mainly explained by different opportunities of transition into retirement. In contrast, differences in layoff rates and job offer arrival rates cannot explain these patterns. Our results support the idea that retirement incentives, more than weak labor demand, are responsible for the low employment rates of older workers.
    Date: 2014–05
  5. By: Alasdair Brown (University of East Anglia); Subhasish M. Chowdhury (University of East Anglia)
    Abstract: Contests are ubiquitous in economic and political settings. Contest designers often use tools to make a contest among asymmetric contestants more even, in order to either elicit higher effort levels, or for ethical reasons. Handicapping - in which stronger participants are a priori weakened - is one successful tool that is widely used in sports, promotional tournaments and procurement auctions. In this study we show theoretically that participants may also increase their destructive effort, and sabotage their rivals' performance, when handicapping is employed. We empirically verify this prediction using data on 19,635 U.K. horse-races in 2011 and 2012. Our results suggest that while a level field may be conducive to heightened positive effort in general, in a setting where both handicapping and sabotage (`interference') are present it also lays the ground for greater destruction.
    Date: 2014–04

This nep-hrm issue is ©2014 by Tommaso Reggiani. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.